Is it just me, but is it really unfair and anti competitive when a shopping centre has two supermarkets
Both Coles or both woolies? Simply for no reason other than to keep out the other competitors.
I would have thought that was illegal?
Examples northcote and karingal Victoria
The tactic is time honoured in much of the world both in shopping centres as well as out in the broader real estate market. Regulation? Little to nothing because government has generally sided with various donor groups (vested interests) to assure there are not many or sometimes any competitors too close.
The last sentence in this overview of many instances of self-competition reinforces your comment. A look at Northcote suggests, as you wrote, it is a defensive anti-competitive lockup.
Good point @carlos, thanks for starting the discussion. If anyone else in the Community has similar examples, we’d be interested to hear from you.
There is something about australian business life that seems to encourage cosy duopolies, look at the, supermarkets, the airlines, and until the foreign vehicle invasion of the last 30 or so years it was car makers too that is Holden and Ford, News Corp & Fairfax the two main large pathology service providers Primary and Sonic, tabcorp and tatts and these are just the ones I can think of at the moment.
Is it a psyche? that as a country we like it and feel comfortable with duopolies or is it the vested interests are so powerful that they lobby hard to make sure the politicians don’t do anything to undermine the status quo and that usually is a duopoly?
I disagree the cosy duopoly in Australia theory is unique to Australia
Duopoly doesn’t necessary mean there are 0 competitors, but the two main have the majority market. And every country and region suffers this.
Other duopolies that come to mind
Internet Data: Microsoft / Google
Mobile Phones/Tablets: iPhone-IOS / Android
All Computers Intel / AMD
Video technologies: AMD / Nvidia
Food USA: WalMart / Costco
Amazon / eBay
Visa/Mastercard
Elevators Schindler / Otis
I remember reading a study about choice, comparing and stress, so people compare two items at a time to elimination
however
I suspect it was 2 or 3 choices? and people give up
Shop most people would simply have two always and variable third choice?
Woolworths /IGA
Woolworths /Coles
Aldi/Coles
I chose Coles
I suspect people now recognise even after you choose Coles or Intel or Apple
You have huge long hours picking ginormous variety of products, colours, ratings, increment code name changes, health levels, longevity.
We just don’t have the stamina to compare more than the 2 brands (harvey Norman./ JB Hifi)
before we must pick between 30 varieties of Samsung TVs that do the exact same thing with different buzz words and prices
The biggest irony in all of this the retailers and manufactures con us with ‘Choices’ is good for us and they have the most, so it is our best interest to pick them
however that store with more choices cause us to prioritise those companies in the first round of A vs B choice
we then choice the maker or retailer that gives the most variety in theory that they are the most likely to suit our desire to be unique and value.
If one looks on the positive side, and choses to shop at one of the supermarkets where the two of the same chain are close to each other, it can save a small amount of fuel as less distance is travelled or if one lives within walking distance, the walking distance catchment would increase meaning more may chose to walk than use cars which are less environmentally friendly.
I wonder if some in near CBD areas are expecting higher densification in the future to support more than one supermarket.
In China, there is often the same supermarket chain in each inner city residential block (which are about 400m x 300m)…which I expect is there to service that block. Such reduces reliance of cars for supermarket journeys and also increases the employment base in the local area.
An example in Brisbane is Sunnybank Hills, there is a Woollies on both sides of Compton Road in separate shopping centres. Such would avoid the need to cross the road to complete general and/or supermarket shopping.
I think you have confused the human condition of difficultly between having too many options to chose from and having sharper pricing by increased competition in a given market.
If it were as simple as you say then supermarkets would only offer no more than two different bands of every product but clearly they don’t they offer a multitude of brands of the same items.
not sure if simple is an insult or not
'm not talking Brands but varieties
I
We are not talking competition between the brands of foods at the store but Varieties (or fake label brands like Dan Murphy’s) from those small number of brands
a number of independent brands would be positive, but the supermarkets (any other large form factor retailers) mostly only have 2 brands with dozen varieties, same with any other store. The number of varieties then lock out the other brands, (much like the land banking)
sharper competition within one store is certainly not going on the dozen varieties within the supermarket fridge competition? certainly not since the supermarket tells the supplier what they are allowed to charge, and then simply undercuts them with the home brand in the most popular variety with information that only the one supplier and the supermarket knows.
The point is business do everything for a reason , the huge variety is a deliberate activity to facilitate confusion
The variety is then a marketing gimmick. Pick us we have the biggest variety. but we get there and the home brand / base variety is cheap, a couple loss leader sales are cheap then huge margins are made by stores on everything in the middle.
in case of manufacturer there are also a few exorbanant premium varieties to create a value illusion in the middle.
Why on earth do we need twenty different varieties of white flour
Fridge packs of raw chicken in thigh pre cut pre packaged in multiple thicknesses
dozen varieties of corn chips’
many dozens of Buckets at bunnings
30 different TV models from Samsung "in the same size "
Again you hold this view that we have duopolies because people are not comfortable choosing items when they have too many options.
My response is if duopolies formed because it was simply a choice problem, then the selves of the stores would not be stocked with the many competing brands of the same item that they currently are, but they would have only 2 options. For example there would be only 2 brands of eggs or dog food or washing detergent but there are a multitude of these brands in all product lines in every store I have visited.
I contend it is an australian proclivity to form business duopolies and the reason is varied but one of the factors why it happens is because we have weak competition laws and a political class that is beholden to the country’s business interests via lobbyists and donations. This means the powerful incumbents have a free hand to defend their patch so there are no moves to introduce laws like the US has called anti-trust laws which have been very effective in punishing monopoly and duopolies using their market power to squash their competition.
If we look further at the US they have many airlines serving their domestic market not just 2 like us. Why doesn’t singapore airlines fly domestically in Australia? something they have desperately wanted to do since the 1990’s because qantas lobbying in canberra is so effective that it is blocked from doing so by our laws.
The USA has many car makers all with factories in the USA selling cars, such as Toyota, Honda, ford, GM, Hyundai, Nissan just to name a few, we now have no car makers.
The USA has a multitude of supermarket chains with the top 20 including walmart amongst them controlling around 70% of the market and the biggest one being walmart only controls a market share around 20% all working on very thin retail margins unlike australian that has 2 behemoths that dominate the market and they enjoy the fattest retail margins in the developed world.
If resistance to making a choice was the reason for duopolies like you suggest then why do we have 300 new car models (all imported) in the australian car market? If it was a choice problem then all these importers would go broke but yet new car sales are growing annually a fast clip.
I contend that duopolies are the result of weak laws and weak pollies because they allow the incumbents to block and stifle competition and only when true competition is allowed to flourish will it force down prices.
i don’t know many enormous market controlling companies have a small variety easy to navigate
USA car making is a different story, considering the size of market and government policies.
a maker could have just 5% market share of a design variety and still be viable in US manufacturing
Not surprisingly they exceed this
.compared to our population you would need 10x that not many car markers can command minimum 50% on one model blueprint ,
not surprisingly Commodore and Falcon were very successful being manufactured here when car variety was limited to a few brands with narrow hatchbacks and popular large car segment owned ~80% market,
It should not surprise we have no makers
Back to our problem with excessive variety, Holden and Ford sell no less that 10 different shell designs SUV full compact mid mini 4wd large medium, Hatchback small medium large.utility pickup
Even if all car makers but ford and holden were banned from the country
how can they possible get the numbers in one shell design to efficiently make a factory line.
Not surprisingly US market buy a narrow taste of vehicle variety
selling >900,000 Pickups alone by Ford 1 Brand! Toyota >300,000
Look at australia, top selling car Hilux 40,000 only
Huge varieties of Cars has been a disaster to our country under the illusion of choice to value,
the variety has cost manufacturing jobs,
drives up cost of parts; retailers now stocking huge variety of parts and accessories many of which may never sell so they need large margins on what we buy to cover inevitable losses
I actually suspect despite the $13990 talk of cars
that the prices have gone up since the variety increased because they get you in with magic loss leading base models and bamboozle with tiered varieties of the models accessories often highly inflated
the top tier $30,000 always flaunted as why the $20,000 model is fantastic value, but is it really?
certainly I’ve never seen a car advertise anything but the base model until your in high pressure one to one selling unable to compare with the competitors mid range variety.
even the ads always show the base price but picture new to it the top model with a disclaimer premium model displayed
Now you are heading off on real tangent.
Australia has a long history of protecting the local car industry remember the Button car plan one of the more recent amongst many successive government efforts to restrict or block foreign car imports by use of tariffs and quotas etc. This all designed to protect the local car industry, again the weak political classes be held captive to block competition to serve the vested local interests. Its only after they abandoned these efforts have the number of car makes and models ballooned in this country we are arguably the most diverse new car market anywhere in the world and compared to wages new car pricing has fallen dramatically as a result.
Cars have never been cheaper in my lifetime compared to income all because we did away with protecting local duopolies and cabals and allowed real competition.
But this has been my point all along australia has a real proclivity to allow cosy duopolies to form like the supermarkets, airlines or small cabals like the banks to work behind the scenes to ensure successive governments block real competition so these duopolies and cabals can featherbed their profits at our expense, and it is only when efforts are made to tear down these barriers like in the car industry do we see real competition.
Its not too much choice that cause duopolies it is lack of competition that causes the problem.
I certainly disagree,
cars are cheaper for a enormous number of reasons, particularly automation, materials efficiencies, increased economy of scale , scientific management manufacturing, outsourcing to China and all makers being a victim of needing to maintain continuous revenue by encouraging regular replacement of a car that would typically last well over 10 years.
